Roger Beadle is right, “The city’s swelling pension debt isn’t being addressed” – the question remaining, how should we address it?

18 Feb

I was glad to see this letter in the Enterprise Record questioning the intentions behind the sales tax increase measure.

The sales tax proposed by city council begs the question: what are their plans for spending it?  Yes, city manager Mark Orme laid out how it would be disbursed, but only in generalities.  The council moved to enter into agreement with Clifford Moss, an Oakland-based firm specializing in election planning, to “sell” the tax to voters; their fee could reach $91,000.

The city manager expects close to $800 million in expenditures over a ten-year period; no details about the city’s targeted project expenditures.  He estimates $255 million in sales taxes over ten years; less than half of his projected $545 million budget for Capital Projects, which are what, fixing existing streets, or building new roadways for mid to high-end housing developments?

Orme said the city received about $2.2 million in its current fiscal year from the state’s gas tax that is “meant” to be allocated to road repair projects.  Well, has it?  The City Budget line-item Gas Tax still shows a Fund Balance of $2,213,762. The city has budgeted $2 million in Waste Hauler Franchise Fees, which were supposed to be for road maintenance.  Promise kept? The $2.8 million transient occupancy tax revenue is sucked up by the general fund, not reinvested in marketing to increase tourism, which I’ll write about at another time.

The city’s swelling pension debt isn’t being addressed.  Maybe the police could start issuing red light violations at 8th, 9th, Main and Broadway.  That alone would start to cover the city manager’s seven-figure pension fund debt.

Roger S. Beadle

There are so many issues here, it’s hard to decide what pisses me off the most. Yes, council has approved spending up to $91,000 of TAXPAYER MONEY on a tax increase campaign. Add that to the $400,000 already spent on an ice skating rink. Yes, the ice rink, proposed a few years ago by another tax consultant, was nothing but a carrot. But this isn’t the kind of spending that has put us where we are. Wait for it.

Beadle goes on to ask if the funds will actually be used to fix existing streets. As we know, the gas tax and the garbage tax are both dumped into the General Fund every year. Given the amount we have received from those two sources, we should be seeing major improvements in the older neighborhoods around town, instead Staff recommends funneling the money into the General Fund. Last year it was spent on raises for public safety employees, this year it went to raises for SEIU employees. The Transient Occupancy Tax, rather than being re-invested in tourism or even protecting visitors, is dumped into the General Fund.

The new sales tax proceeds would also be dumped into the General Fund – it’s a simple measure. If council and Staff were serious about fixing streets, etc, they’d have put up a 2/3’s measure. Sean Morgan specifically objected on the grounds that a 2/3’s measure would be restricted to specific spending.

Beadle hits the problem at the end of his letter – “The city’s swelling pension debt isn’t being addressed.

Here’s the funny thing – as far as Staff and Council are concerned, the pension deficit is being addressed. They’re addressing it with our money, and they are proposing to take more of our money to address it even more!

So I responded to Beadle’s letter. I want to expand the conversation into why the deficit is there at all, and why no tax increase will suffice as long as Council continues to agree to unreasonable employee contracts that lay all the debt on the taxpayers.

Thanks Roger Beadle for asking, what are Council and Staff’s plans for spending revenues from their proposed sales tax increase? Proponents of this tax increase measure have mentioned public safety and infrastructure improvements, but they are putting a “simple” measure on the ballot. A simple measure is not dedicated to any specific use and goes into the General Fund to be spent at any whim of Council and Staff.

Chicoans want parks and creeks cleaned up, city streets repaired, and more law enforcement. But, looking at past actions, it seems clear that Staff and Council want to pay down the pension deficit they have created through unrealistic contributions to CalPERS. Employees pay between 10.5 and 22.7 percent of their pension cost, leaving the rest, including interest fees, to be picked up by the taxpayers.

Compounding the issue is a recently approved 9% raise for SEIU employees. The report from Staff indicates a “total cost” of $967,000. Does that figure include increased pension costs?

Every year, Staff funnels more taxpayer money from the General Fund into the Pension Stabilization Trust, to make annual “extra” payments to CalPERS. Clifford Moss consultants estimate the payments will reach $18 million/yr by 2025, because the city is not controlling “overhead”(management) costs. The city manager, with a base salary of $207,000/yr, only pays 14%, which results in his seven digit pension deficit, just for one position.

This is the rabbit hole down which all the money is going. Put a cork in it, vote NO.

Juanita Sumner, Chico CA

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